UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


SCHOOL  OF  LAW 
LIBRARY 


TREASURY   DEPARTMENT 

UNITED  STATES  INTERNAL  REVENUE 


REGULATIONS  No.  40 


RULES  AND  REGULATIONS 

FOR 

COLLECTION  OF  TAX  ON  TRANSFERS 

OF  STOCK  AND  ON  SALES  OF  PRODUCTS 

FOR  FUTURE  DELIVERY 

UNDER  WAR  REVENUE  ACT 

APPROVED  OCTOBER  3,  1917 


MADE  AND  PROMULGATED  BY  THE 

COMMISSIONER  OF  INTERNAL  REVENUE 

WITH  APPROVAL  OF  THE 

SECRETARY  OF  THE  TREASURY 


NOVEMBER  30,  1917 


WASHINGTON 

GOVERNMENT  PRINTING  OFFICE 

1917 


s 

\9\^ 


REGULATIONS  No.  40. 


WAR  REVENUE  ACT  OF  1917. 

law  and  regulations  relating  to  the  assessment  and  collection  of 

war  stamp  taxes  on  sales,  transfers.  and  deliveries  of  shares  of 

stock  and  uke  securities.  and  contracts  of  sale  of  products 

and   merchandise   upon   exchanges   for   future   delivery. 

Treasury  Department, 
Office  of  Commissioner  of  Internal  Revenue, 

Washington^  D.  G.^  November  30,  1917. 

LAW. 

By  an  act  of  Congress  approved  October  3,  1917,  entitled  "An  act 
to  provide  revenue  to  defray  war  expenses,  and  for  other  purposes," 
it  is  provided,  among  other  things : 

Bg  it  enacted  by  the  Senate  and  Hov.se  of  Representatives  of  the  United  States 
of  America  in  Congress  assembled : 

Title  VIII.— Wab  Stamp  Taxes. 

•  Sec.  800.  That  on  and  after  the  first  day  of  December,  nineteen  hundred  and 
seventeen,  there  shall  be  levied,  collected,  and  paid,  for  and  in  respect  of  the 
several  bonds,  debentures,  or  certificates  of  stock  and  of  indebtedness,  and 
other  documents,  instruments,  matters,  and  things  mentioned  and  described  in 
Schedule  A  of  this  title,  or  for  or  in  respect  of  the  vellum,  parchment,  or  paper 
upon  which  such  instruments,  matters,  or  things,  or  any  of  them,  are  written  or 
printed,  by  any  person,  corporation,  partnership,  or  association  who  makes, 
signs,  issues,  sells,  removes,  consigns,  or  ships  the  same,  or  for  whose  use  or 
benefit  the  same  are  made,  signed,  issued,  sold,  removed,  consigned,  or  shipped, 
the  several  taxes  specified  in  such  schedule. 
Sec.  802.  That  whoever— 

(a)  Makes,  signs,  issues,  or  accepts,  or  causes  to  be  made,  signed,  issued,  or 
accepted,  any  instruments,  document,  or  paper  of  any  kind  or  description  what- 
soever without  the  full  amount  of  tax  thereon  being  duly  paid ; 

iii  ^  ^  ^  ^  ^  ^ 

(d)  Makes  use  of  any  adhesive  stamp  to  denote  any  tax  imposed  by  this  title 
without  canceling  or  obliterating  such  stamp  as  prescribed  in  section  eight 
hundred  and  four; 

Is  guilty  of  a  misdemeanor  and  upon  conviction  thereof  shall  pay  a  fine  of 
not  more  than  $100  for  each  offense. 

Sec.  803.  That  whoever— 

(3) 


(a)  Fraudulently  cuts,  tears,  or  removes  from  any  vellum,  parchment,  paper, 
instrument,  writing,  package,  or  article,  upon  which  any  tax  is  imposed  by  this 
title,  any  adhesive  stamp  or  the  impression  of  any  stamp,  die,  plate,  or  other 
article  provided,  made,  or  used  in  pursuance  of  this  title ; 

(b)  Fraudulently  \ises,  joins,  fixes,  or  places  to,  with  or  upon  any  vellum, 
parchment,  paper,  instrument,  writing,  package,  or  article,  upon  which  any  tax 
is  imposed  by  this  title,  (1)  any  adhesive  stamp,  or  the  impression  of  any  stamp, 
die,  plate,  or  other  article,  which  has  been  cut,  torn,  or  removed  from  any  other 
vellum,  parchment,  paper,  instrument,  writing,  package,  or  article  upon  which 
any  tax  is  imposed  by  this  title;  or  (2)  any  adhesive  stamp  or  the  impression 
of  any  stamp,  die,  plate,  or  other  article  of  insufficient  value;  or  (3)  any  forged 
or  counterfeit  stamp,  or  the  impression  of  any  forged  or  counterfeited  stamp, 
die,  plate,  or  other  article ; 

(c)  Willfully  removes,  or  alters  the  cancellation,  or  defacing  marks  of,  or 
otherwise  prepares,  any  adhesive  stamp,  with  intent  to  use,  or  cause  the  same 
to  be  used,^  after  it  has  been  already  used,  or  knowingly  or  willfully  buys,  sells, 
offers  for  sale,  or  gives  away,  any  such  washed  or  restored  stamp  to  any  person 
for  use.  or  knowingly  uses  the  same; 

(d)  Knowingly  and  without  lawful  excuse  (the  burden  of  proof  of  such 
excuse  being  on  the  accused)  has  in  possession  any  washed,  restored,  or  altered 
stamp,  which  has  been  removed  from  any  vellum,  parchment,  paper,  instrument, 
writing,  package,  or  article,  is  guilty  of  a  misdemeanor,  and  upon  conviction 
shall  be  punished  by  a  fine  of  not  more  than  $1,000,  or  by  imprisonment  for 
not  more  than  five  years,  or  both,  in  the  discretion  of  the  court,  and  any  such 
reused,  canceled,  or  counterfeit  stamp  and  the  vellum,  parchment,  document, 
paper,  package,  or  article  upon  which  it  is  placed  or  impressed  shall  be  for- 
feited to  the  United  States. 

Sec.  804.  That  whenever  an  adhesive  stamp  is  used  for  denoting  any  tax 
imposed  by  this  title,  except  as  hereinafter  provided,  the  person,  corporation, 
partnership,  or  association,  using  or  affixing  the  same  shall  write  or  stamp  or 
cause  to  be  written  or  stamped  thereupon  tlie  initials  of  his  or  its  name  and  the 
date  upon  which  the  same  is  attached  or  used,  so  that  the  same  may  not  again 
be  used :  Provided,  That  the  Commissioner  of  Internal  Revenue  may  prescribe 
such  other  method  for  the  cancellation  of  such  stamps  as  he  may  deem  ex- 
pedient. 

Sec.  805.  (a)  That  the  Commissioner  of  Internal  Revenue  shall  cause  to  be 
prepared  and  distributed  for  the  payment  of  the  taxes  prescribed  in  this  title 
suitable  stamps  denoting  the  tax  on  the  document,  articles,  or  thing  to  which 
the  same  may  be  affixed,  and  shall  prescribe  such  method  for  the  affixing  of 
said  stamps  in  substitution  for  or  in  addition  to  the  method  provided  in  this 
title,  as  he  may  deem  expedient. 

*  *  'P  *  *  if  * 

(c)  All  internal-revenue  laws  relating  to  the  assessment  and  collection  of 
taxes  are  hereby  extended  to  and  made  a  part  of  this  title,  so  far  as  applicable, 
for  the  purpose  of  collecting  stamp  taxes  omitted  through  mistake  or  fraud 
from  any  instrument,  document,  paper,  writing,  parcel,  package,  or  article 
named  herein. 

Schedule  A. — Stamp  Taxes. 

Sec.  807.  Subdivision  4.  Capital  stock,  sales  or  transfers:  On  all  sales,  or 
agreements  to  .sell,  or  memoranda  of  sales  or  deliveries  of,  or  ti'ansfers  of  legal 
title  to  shares  or  certificates  of  stock  in  any  association,  company,  or  corpora- 
tion, whether  made  upon  or  shown  by  the  books  of  the  association,  company, 
or  corporation,  or  by  any  assignment  in  blank,  or  by  any  delivery,  or  by  any 


paper  or  agreement  or  memorandum  or  other  evidence  of  transfer  or  sale, 
whether  entitling  the  holder  in  any  manner  to  the  benefit  of  such  stock  or  not, 
on  each  $100  of  face  value  or  fraction  thereof,  2  cents,  and  where  such  shares 
of  stock  are  witliout  par  value,  the  tax  shall  be  2  cents  on  the  transfer  or  sale 
or  agreement  to  sell  on  each  share,  unless  the  actual  value  thereof  is  in  excess 
of  $100  per  share,  in  which  case  the  tax  shall  be  2  cents  on  each  $100  of  actual 
value  or  fraction  thereof :  Provided,  That  it  is  not  intended  by  this  title  to 
impose  a  tax  upon  an  agreement  evidencing  a  deposit  of  stock  certificates  as 
collateral  security  for  money  loaned  thereon,  which  stock  cortificares  are  not 
actually  sold,  nor  upon  such  stock  certificates  so  deposited:  Provided  further, 
That  the  tax  shall  not  be  imposed  upon  deliveries  or  transfers  to  a  broker  for 
sale,  nor  upon  deliveries  or  transfers  by  a  broker  to  a  custoaiet'  for  v/liom  and 
upon  whose  order  he  has  purchased  same,  but  such  deliveries  or  transfers  shall 
be  accompanied  by  a  certificate  setting  forth  the  facts:  Provided  further,  That 
in  case  of  sale  where  the  evidence  of  tran^ifor  is  shown  only  by  tlie  books  of 
the  company  the  stamp  shall  be  placed  upon  such  books;  and  where  the  change 
of  ownership  as  by  transfer  of  the  certificate  the  stamp  shall  be  placed  upon  the 
certificate;  and  in  cases  of  an  agr<3ement  to  sell  or  wliere  the  traiisfer  is  by 
delivery  of  the  certificate  assigned  in  blank  there  shall  be  made  and  delivered 
by  the  seller  to  the  buj'er  a  bill  or  meniuranduin  of  sucli  sale,  to  which  the 
stamp  shall  be  affixed;  and  every  bill  or  meiiiovanduni  of  sale  or  agreem^^nt 
to  sell  before  mentioned  shall  show  the  date  thereof,  the  name  of  the  seller, 
the  amount  of  the  sale,  and  the  matter  or  thing  to  which  it  refers.  Any  per- 
son or  persons  liable  to  pay  the  tax  as  herein  provided,  or  anyone  who  acts  in 
the  matter  as  agent  or  broker  for  such  person  or  persons  who  shall  make  any 
such  sale,  or  who  shall  in  pursuance  of  any  such  sale  deliver  any  stock  or 
evidence  of  the  sale  of  any  stock  or  bill  or  memorandum  thereof,  as  herein  re- 
quired, without  having  the  proper  stamps  affiled  tiiereto  wivh  intent  to  evade 
the  foregoing  provisions  shall  be  deemed  guilty  of  a  misdemeanor,  and  upon 
conviction  thereof  shall  pay  a  fine  of  not  exceeding  $1,000,  or  be  imprisoned  not 
more  than  six  months,  or  both,  at  the  discretion  of  the  court. 

Subdivision  5.  Produce,  sales  of.  on  exchange:  Upon  each  sale,  agreement 
of  sale,  or  agreement  to  sell,  including  so-called  transferred  or  scratch  sales, 
any  products  or  merchandise  at  any  exchange,  or  board  of  trade,  or  other 
similar  place,  for  future  delivery,  for  each  $100  in  value  of  the  merchandise 
covered  by  said  sale  or  agreement  of  sale  or  agreement  to  sell,  2  cents,  and 
for  each  additional  $100  or  fractional  part  thereof  in  excess  of  $100,  2  cents: 
Provided,  That  on  every  sale  or  agreement  of  sale  or  agreement  to  sell  as 
aforesaid  there  shall  be  made  and  delivered  by  the  seller  to  the  buyer  a  bill, 
memorandum,  agreement,  or  other  evidence  of  such  sale,  agreement  of  sale, 
or  agi-eement  to  sell,  to  which  there  shall  be  affixed  a  lawful  stamp  or  stamps 
in  value  equal  to  the  amount  of  the  tax  on  such  sale :  Provided  further.  That 
sellers  of  commodities  described  herein,  having  paid  the  tax  provided  by  this 
subdivision,  may  transfer  such  contracts  to  a  clearing  house  corporation  or 
association,  and  such  transfer  shall  not  be  deemed  to  be  a  sale,  or  agreement 
of  sale,  or  an  agreement  to  sell  within  the  provisions  of  this  act,  provided 
that  such  transfer  shall  not  vest  any  beneficial  interest  in  such  clearing  house 
association,  but  shall  be  made  for  the  sole  purpose  of  enabling  such  clearing 
house  association  to  adjust  and  balance  the  accounts  of  thi^  members  of  said 
clearing  house  association  on  their  several  contracts.  And  every  such  bill, 
memorandum,  or  other  evidence  of  sale  or  agreement  to  sell  shall  show  the 
date  thereof,  the  name  of  the  seller,  the  amount  of  the  sale,  and  the  matter 
or  thing  to  which  it  refers ;  and  any  person  or  persons  liable  to  pay  the  tax 
as  herein  provided,  or  anyone  who  acts  in  the  matter  as  agent  or  broker  for 


such  person  or  persons,  who  shall  make  any  such  sale  av  agreement  of  sale, 
or  agreement  to  sell,  or  who  shall,  in  pursuance  of  any  such  sale,  agreement  of 
sale,  or  agreement  to  sell,  deliver  any  such  products  or  merchandise  without 
a  bill,  memorandum,  or  other  evidence  thereof,  as  herein  required,  or  who 
shall  deliver  such  bill,  memorandum,  or  other  evidence  of  sale,  or  agreement 
to  sell,  without  having  the  proper  stamps  affixed  thereto,  with  intent  to  evade 
the  foregoing  provisions,  shall  be  deemed  guilty  of  a  misdemeanor,  and  upon 
conviction  thereof  shall  pay  a  fine  of  not  exceeding  $1,000,  or  be  imprisoned 
not  more  than  six  months,  or  both,  at  the  discretion  of  the  court. 

That  no  bill,  memorandum,  agreement,  or  other  evidence  of  such  sale,  or 
agreement  of  sale,  or  agreement  to  sell,  in  case  of  cash  sales  of  products  or 
merchandise  for  innnediate  or  prompt  delivery  which  in  good  faith  are  actually 
intended  to  be  delivered  shall  be  subject  to  this  tax. 

Sec.  1001.  That  all  administrative,  special,  or  stamp  provisions  of  law,  in- 
cluding the  law  relating  to  the  assessment  of  taxes,  so  far  as  applicable,  are 
hereby  extended  to  and  made  a  part  of  this  act,  and  every  person,  corporation, 
partnership,  or  association  liable  to  any  tax  imposed  by  this  act  or  for  the 
collection  thereof  shall  keep  such  records  and  render,  under  oath,  such  state- 
ments and  returns,  and  shall  comply  with  such  regulations  as  the  Commissioner 
of  Internal  Revenue,  with  the  approval  of  the  Secretary  of  the  Treasury,  may 
from  time  to  time  prescribe. 

Sec.  1004.  That  whoever  fails  to  make  any  return  required  by  this  act  or  the 
regulations  made  under  authority  thereof  within  the  time  prescribed  or  who 
makes  any  false  or  fraudulent  return,  and  whoever  evades  or  attempts  to 
evade  any  tax  imposed  by  this  act  or  fails  to  collect  or  truly  to  account  for  and 
pay  over  any  such  tax,  shall  be  subject  to  a  penalty  of  not  more  than  $1,000 
or  to  imprisonment  for  not  more  than  one  year,  or  both,  at  the  discretion  of  the 
court,  and  in  addition  thereto  a  penalty  of  double  the  tax  evaded  or  not  col- 
lected or  accounted  for  and  paid  over,  to  be  assessed  and  collected  in  the  same 
manner  as  taxes  are  assessed  and  collected  in  any  case  in  which  the  punishment 
is  not  otherwise  specifically  provided. 

Sec.  1005.  That  the  Commissioner  of  Internal  Revenue,  with  the  approval 
of  the  Secretary  of  the  Treasury,  is  hereby  authorized  to  make  all  needful 
rules  and  regulations  for  the  enforcement  of  the  provisions  of  this  act. 

In  pursuance  thereof,  the  following  regulations  are  hereby  made, 
prescribed,  and  promulgated : 


PART  1. 

Regulations  Promulgated  by  the  Commissioner  of  Internal  Reve- 
nue, with  the  Approval  of  the  Secretary  of  the  Treasury, 
for  Collection  of  Stamp  Taxes  on  Sales  and  Trans- 
fers of  Shares  of  Stock  and  Like  Securities. 


DEFINITIONS. 


Article  1.  That  for  the  purpose  of  these  rcguhitions,  the  term 
"  sales  or  transfers  "  shall  be  held  to  include  all  sales,  agreements  to 
sell,  memoranda  of  sales,  and  all  deliveries  or  transfers  of  legal  title, 
except  as  otherwise  specifically  provided  in  these  regulations. 

That  the  word  "  person  "  or  "  every  person  "  or  similar  term  when- 
ever used  in  these  regulations  shall  include  the  plural  as  Avell  as  the 
singuLar,  and  shall  be  taken  to  refer  to  individuals,  partnerships, 
associations,  and  corporations,  except  where  it  is  plain  from  the 
context  that  a  different  meaning  is  intended. 

That  wherever  the  word  "exchange''  is  used  in  these  regulations, 
except  as  otherwise  specifically  indicated,  it  shall  be  deemed  and 
taken  to  include  each  and  e^i  eiy  agent  or  agency,  auction  place  or 
other  meeting  place  at  which  stocks  are  publicly  bought,  sold,  bid  for, 
offered,  or  excliangecl,  either  between  the  members  or  patrons  of  sueh 
exchange,  or  as  between  members  and  nonmembers,  patrons  and  the 
public,  and  it  shall  include  all  incorporated  and  unincorporated  asso- 
ciations of  individuals,  partnerships,  and  corporations  engaged  in  the 
business  of  publicly  selling,  buying,  or  exchanging  shares  of  stock 
or  interests  therein. 

The  term  "  share  or  shares  of  stock,"  when  used  in  these  regula- 
tions, except  as  otherwise  therein  specifically  defined,  shall  be  held 
and  taken  to  mean  and  include  the  shares  and  certificates  for  shares 
of  stock  representing  interests  in  corporations,  and  in  incorporated 
and  unincorporated  associations,  as  well  as  voting  trust  certificates 
for  shares,  and  certificates  for  shares  or  interests  in  shares,  "  if,  as, 
and  when  issued,"  and  for  "  rights  "  therein. 

The  terms  "  clearing  house,"  "  clearing  house  corporation,"  and 
"clearing  house  association,"  shall  be  held  and  taken  to  mean  and 
include  each  and  every  incorporated  and  unincorporated  associa- 

(7) 


tion  of  individuals,  partnerships,  and  corporations  wholly  or  partly 
engaged  in  the  business  of  clearing,  settling,  or  adjusting  transac- 
tions in  the  purchase,  sale,  receipt,  or  delivery  of  shares  of  stock, 
whether  or  not  the  same  be  a  part  or  department  of  an  exchange  or 
an  independent  bod3^ 

The  act,  omission,  or  failure  of  any  official,  agent,  or  other  person 
acting  for  or  employed  by  any  association,  partnership,  or  corpora- 
tion within  the  scope  of  his  employment  or  office,  shall,  in  every  case, 
also  be  deemed  the  act,  omission,  or  failure  of  such  association,  part- 
nership, or  corporation,  as  well  as  that  of  the  person  or  persons. 

REGISTRATION. 

Art.  2.  Every  person,  partnership,  corporation,  exchange,  or  clear- 
ing house  engaged  in  whole  or  in  part  in  negotiating,  making,  or 
recording  sales,  agreements  to  sell,  deliveries  or  transfers  of  shares 
or  certificates  for  shares  of  stock,  or  in  conducting  or  transacting  a 
stock-brokerage  business,  or  in  the  clearing,  settling,  or  adjusting 
of  any  of  the  transactions  referred  to  in  section  807,  subdivision  4  of 
the  act,  or  who  shall  be  engaged  in  the  business  of  accepting  or  pro- 
curing the  transmission  of  orders  for  the  sale  or  purchase  or  trans- 
fers of  stock  to  be  made  or  executed  at  or  under  the  rules  or  customs 
of  an  exchange  in  the  continental  United  States,  shall,  on  the  first 
day  of  December,  1917 — and  if  not  on  that  date  engaged  in  business 
then  within  ten  days  after  engaging  in  business,  and  on  the  first  day 
of  July  annually  thereafter— file  in  the  office  of  the  collector  of  inter- 
nal revenue  of  the  district  in  which  each  place  of  business  of  such 
person,  partnership,  corporation,  exchange,  or  clearing  house  is 
located,  or  with  such  other  internal-revenue  officer  as  may  be  here- 
after designated,  a  statement,  under  oath,  setting  forth  the  full  name 
or  names  of  such  person  or  persons,  and  of  all  the  members  of  such 
partnership  conducting  or  transacting  the  business,  with  the  post- 
office  address  or  addresses  of  such  person  or  persons,  or  partnership, 
unless  the  person  so  certifying  be  a  corporation,  exchange,  or  clear- 
ing house,  in  which  event  it  shall  set  forth  its  principal  office  or  place 
of  business,  with  the  names  and  addresses  of  its  chief  officer,  its  sec- 
retary, accompanied  by  a  list  of  its  members  and  their  addresses,  and 
if  incorporated,  Avlien  and  where  incorporated,  and  if  not  incor- 
porated under  what  agreement  or  authority  it  is  conducting  such 
business  or  agency.  Such  statement  shall  also  specifically  set  forth 
the  character  of  the  business  to  be  conducted,  and  shall  be  executed 
and  duly  acknowledged  by  the  person  or  persons  so  conducting  or 
intending  to  conduct  said  business,  or  by  the  president  or  secretary 
of  the  corporation  or  exchange  or  clearing  house.  Each  exchange  or 
clearing  house  shall  also  file  with  said  collector  or  other  designated 


internal-revenue  officer  a  copy  of  its  constitution,  charter,  agreement 
of  association,  by-laws,  rules  and  regulations,  and  of  all  amendments 
thereto,  as  the  same  may  from  time  to  time  be  adopted,  and  the  names 
and  addresses  of  new  members  as  from  time  to  time  admitted  to 
membership. 

The  said  statement  shall  further  contain  information  as  to  whether 
the  person  executing  the  same  has  been  licensed  under  any  State  laws 
or  under  any  other  provision  of  Federal  law ;  and  if  so,  the  dates  and 
places  at  which  any  such  licenses  were  issued.  Such  statements  shall 
be  made  upon  forms  to  be  furnished  upon  application  to  the  collector 
of  internal  revenue. 

RECORD  OF  REGISTRATION  KEPT  BY  COLLECTOR. 

Art.  3.  Every  collector  or  other  designated  internal-revenue  officer 
shall  file  and  preserve  each  statement  of  registration  made  to  him  in 
ac<?ordance  with  these  regulations,  and  shall  issue  to  such  person, 
partnership,  exchange,  clearing  house,  or  corporation  a  certificate  of 
registry,  showing  the  date  of  issue,  the  name  of  the  person  or  persons, 
or  exchange,  clearing  house,  or  corporation,  conducting  the  business, 
the  nature  of  the  business  for  which  the  license  is  granted,  and  the 
date  of  expiration  of  said  registry,  which  certificate  shall  be  signed 
by  the  collector  or  other  designated  internal-revenue  officer,  and  shall 
be  posted  in  some  prominent  place  in  the  office  of  said  person,  partner- 
ship, exchange,  clearing  house,  or  corporation  during  the  period  for 
which  issued.  If  such  business  is  conducted  at  more  than  one  place, 
a  certificate  shall  be  so  posted  in  each  such  place  of  business. 

RATE  OF  TAXATION. 

Art.  4.  In  the  case  of  sliares  or  certificates  of  stock  having  a  face 
(or  par)  value,  the  amount  of  the  tax  shall  be  based  upon  the  total 
face  value  of  the  shares  involved  in  any  sale  or  agreement  to  sell 
or  memorandum  of  sale,  deliver}',  or  transfer,  and  shall  be  at  the 
rate  of  2  cents  for  each  $100  of  such  total  face  value  or  fraction 
thereof,  whether  such  aggregate  face  value  is  greater  or  less  than  $100. 
Thus  where  the  total  face  value  of  the  shares  or  certificates  of  stock, 
agreement  to  sell,  or  memorandum  of  sale  involved  in  any  such  trans- 
action is  less  than  $100,  the  amount  of  such  tax  shall  be  2  cents;. 
where  the  total  face  value  exceeds  $100  but  is  $200  or  less,  the  amount 
of  such  tax  shall  be  4  cents,  and  on  all  fractions  of  $100  of  face  value, 
the  tax  shall  be  2  cents;  and  where  such  sliares  of  stock  are  without 
face  (or  par)  value,  the  tax  shall  be  2  cents  on  the  transfer  or  sale 
or  agreement  to  sell  on  each  share,  unless  the  actual  value  thereof 
is  in  excess  of  $100  per  share,  in  which  case  the  tax  shall  be  2  cents 
on  each  $100  of  actual  value  or  fraction  thereof. 
30102°— 17 2 


10 


TRANSACTIONS  NOT  TAXABLE. 

Art.  5.  No  tax  is  imposed  upon  an  agreement  evidencing  a  deposit 
of  stock  certificates  as  collateral  security  for  money  loaned  thereon, 
which  stock  certificates  are  not  actually  sold  or  intended  to  be  sold 
nor  as  to  which  there  is  no  change  of  oAvnership  or  interest  nor  upon 
such  stock  certificates  so  deposited. 

Nor  upon  deliveries  or  transfer  to  a  broker  for  sale,  nor  upon 
deliveries  or  transfers  by  a  broker  to  a  customer  for  whom  and  upon 
whose  order  he  has  purchased  the  same,  provided  such  deliveries 
or  transfers  shall  be  accompanied  in  each  case  by  a  certificate  set- 
ting forth  the  facts,  such  certificates  to  be  substantially  in  the  fol- 
lowing form: 

(a)    (In  the  case  of  a  transfer  to  a  broker)  — 

"  We  hereby  certify  that  we  have  no  ownership,  or  in- 
terest, in  *  *  *  shares  of  the  stock  above  transferred, 
tlie  transfer  by  the  owner  to  lis  being  merely  for  the  pnr- 
pose  of  sal?." 

(6)    (In  the  case  of  a  transfer  by  a  broker)  — 

"  We  hereby  certify  that  the  transfer  of  *  *  *  of 
the  within  sliares  to  the  names  indicated  by  tlie  star  is 
made  solely  to  complete  the  purchase  made  by  us  for  our 
customer,  and  we  have  no  ownership  or  interest  therein." 

No  broker  who  has  filed  a  certificate  under  the  foregoing  clause 
{a)  of  this  ruling  shall  file  a  certificate  under  the  foregoing  clause 
(b)  with  reference  to  the  transfer  of  any  shares  of  stock  covered  by 
the  certificate  filed  by  him  under  clause  (a). 

Nor  upon  transfers  or  deliveries  to  a  clearing  house  for  the 
sole  purpose  of  clearing  or  adjusting  accounts  between  members, 
where  no  beneficial  interest  is  vested  in  said  clearing  house  or 
clearing  association  and  there  has  been  no  change  of  title  or  inter- 
est :  Provided,  The  exchange  shall  by  appropriate  by-laws  or  regula- 
tions require  from  its  members  that  all  transactions  of  such  members 
in  shares  of  stock  be  promptly  reported  to  such  clearing  house  to 
the  end  that  the  stamp  taxes  thereon  may  be  collected  and  that  no 
other  clearances  or  settlements  or  trading  in  balances  shall  be  per- 
mitted. All  transactions,  actual  or  otherwise,  except  as  in  the  act 
are  exempt,  shall  be  subject  to  the  tax. 

No  provision,  by-law,  rule,  or  custom  of  any  exchange,  or  similar 
institution,  inconsistent  with  any  requirement  or  provision  of  the 
act  or  any  regulations  thereunder,  nor  any  collateral  or  additional 
agreement  or  understanding,  either  verbal  or  written,  respecting 
the  subject  matter  of  such  sales  or  transfers,  or  the  settlement  or 
fulfillment  thereof,  which  is  inconsistent  or  in  conflict  with  any 


11 

requirement  of  said  act  or  of  these  regulations,  shall  exempt  any 
person  from  the  payment  of  the  tax  provided  for  under  said  act. 

DELIVERY  OF  MEMORANDUM  OF  SALES. 
Art.  6.  Every  person  who  makes  sales,  or  agreements  to  sell,  or 
memoranda  of  sales  or  deliveries  of,  or  transfers  of  the  legal  or  bene- 
ficial title  to  shares  of  stock,  at,  in  or  on  any  exchange  or  similar 
place  of  business,  and  every  person  who  makes  any  agreement  to  sell 
stock  or  makes  a  transfer  of  stock  by  delivery  of  the  certificate  there- 
for assigned  in  blank,  shall  as  a  part  of  every  such  transaction, 
promptly  make  and  deliver  to  the  buyer  a  bill,  or  memorandum  of 
sale,  or  agreement  to  sell,  duly  signed  by  the  principal  or  his  agent, 
which  shall  show  the  date  of  the  transaction  evidenced  by  it,  the 
names  of  the  seller  and  buyer,  the  shares  of  stock  to  which  it  relates, 
the  number  of  shares  and  the  price  per  share  of  said  stock,  and  shall 
bear  a  number  upon  the  face  thereof.  No  more  than  one  such  bill  or 
memorandum  made  by  the  seller  on  any  given  day  shall  bear  the 
same  number:  Provided.,  however,  That  no  single  transaction  of  a 
purchase  or  sale  that  is  made  upon  an  exchange  by  one  member  for 
another  member  shall  require  to  be  evidenced  by  more  than  one 
stamped  memorandum  of  sale  or  agreement  to  sell. 

AFFIXING  AND  CANCELLATION  OF  STAMPS, 

Art.  7.  In  case  the  transfer  is  effected  by  delivery  of  the  certificate 
of  stock  assigned  in  blank  the  stamp  shall  be  aifixed  to  the  bill, 
memorandum,  or  agreement  to  sell. 

In  case  the  change  of  ownership  is  by  transfer  of  the  certificate  of 
stock,  the  stamp  shall  be  affixed  to  the  certificate,  and  in  no  event 
shall  any  company  or  registrar  or  transfer  agent  accept  or  transfer 
any  shares  of  stock  or  certificates  therefor  unless  stamps  for  all 
transfer  tax  required  to  be  affixed  to  the  certificate  are  attached 
thereto  properly  canceled. 

In  case  the  evidence  of  the  transfer  is  shown  only  by  the  books 
of  the  company  the  stamp  shall  be  placed  upon  the  books. 

In  all  other  cases  the  payment  shall  be  evidenced  by  affixing  the 
stamp  upon  the  memorandum  or  agreement  of  sale  to  be  delivered 
by  the  seller  to  the  buyer. 

The  person  using  or  affixing  a  stamp  shall  write  or  stamp  thereon, 
in  ink,  his  initials  and  the  day,  month,  and  year  on  which  the  same 
shall  be  used  or  affixed,  or  shall  by  cutting  or  cancelling  said  stamp 
with  a  machine  or  punch  affixing  his  initials  and  date  as  aforesaid, 
so  deface  the  stamp  as  to  render  it  unfit  for  reuse.  In  addition  to 
the  foregoing,  stamps  of  the  value  of  10  cents  or  more  shall  have 
three  parallel  incisions  made  by  some  sharp  instrument  lengthwise 
through  the  stamp  after  the  same  has  been  attached  to  the  bill, 
memorandum,  or  other  evidence  of  sale  or  transfer  of  stock,  provided 


12 

this  will  not  be  required  where  stamps  are  canceled  by  perforation. 
The  cancellation  by  either  method  should  not  so  deface  the  stamp 
as  to  prevent  its  denomination  and  genuineness  from  being  readily 
determined. 

RECORDS  OF  SALES  OR  TRANSFERS  OF  STOCK. 

Art.  8.  All  persons  who  are  wholly  or  partly  engaged  in  the  busi- 
ness of  buying,  selling,  or  transferring  shares  of  stock,  whether  at 
public  or  private  sale,  or  whether  or  not  they  are  members  of  an 
exchange,  including  persons  engaged  in  transactions  known  as 
"  matched,"  or  "  on-ordep,"  or  "  pass-outs,"  or  by  any  other  name  or 
term  at,  on,  or  in  any  exchange  or  similar  place,  whether  or  not  such 
transactions  are  cleared,  adjusted,  or  settled  through  a  clearing  house 
or  directly  between  seller  and  buyer,  or  otherAvise,  shall  keep  a  record 
showing — 

(a)  The  date  of  the  transaction. 

(b)  The  name  of  the  seller  or  transferror. 

(c)  The  name  of  the  purchaser  or  transferee. 

(d)  If  the  order  was  executed  on  an  exchange,  the  name  of  the 

person  who  executed  the  order. 

(e)  Whether  the  transaction  is  a  purchase  or  sale. 

(f)  The  name  of  the  corporation  the  stock  of  which  is  the  subject 

of  the  sale  and  the  number  of  shares  thereof. 

(g)  Whether  the  stock  was  listed  on  an  exchange. 

(h)   Whether  the  stock  was  cleared  through  a  clearing  house, 
(i)   The  face  or  par  value  of  the  stock, 
(j)   The  price  of  the  stock  if  there  is  no  face  or  par  value, 
(k)   Whether  the  shares  were  borrowed  or  loaned. 
(1)   Whether  the  transaction  was  "  matched,"  "  on-order,"  a  "  pass- 
out,"  or  a  "  scratched  sale,"  or  any  other  kind  of  sale  or 
purchase, 
(m)  The  amount  of  tax  paid, 
(n)   The  identifying  number  of  the  bill  or  memorandum  of  sale, 

as  required  by  article  6  of  these  regulations, 
(o)  The  origin  of  the  order,  whether  domestic  (referring  to  the 
Continental  United  States),  or  foreign  (referring  to  other 
countries) . 
Persons  using  such  forms  may  incorportite  therein  additional  col- 
umns that  would  be  of  use  to  them,  such  columns  to  be  placed  after 
the  columns  containing  the  information  herein  required,  so  as  not 
to  interfere  with  the  columns  and  headings  hereby  prescribed.     These 
records  must  be  in  book  form,  and  all  entries  therein  must  be  legibly 
written  in  ink  and  the  records  kept  for  a  period  of  at  least  two  years. 
Such  record  forms  will  not  be  supplied  by  the  department. 
The  form  of  record  required  shall  be  as  follows : 


13 


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15 

RETURNS  BY  PERSONS  MAKING  SALES. 

Art.  9.  All  persons  who  are  wholly  or  partly  engaged  in  the  busi- 
ness of  buying,  selling,  or  transferring  shares  of  stock  at,  in,  or  on 
an  exchange,  whether  or  not  such  sales,  purchases,  or  transfers  shall 
be  made,  cleared,  settled,  or  adjusted  through  a  clearing  house;  shall 
on  or  before  the  fifteenth  day  of  each  month,  and  at  any  other  time 
or  times  that  may  be  designated  by  the  Commissioner  of  Internal 
Revenue,  render  under  oath  a  true  return  of  all  such  sales  and  pur- 
chases to  said  commisioner  for  the  preceding  month  or  for  any  other 
period  designated  by  the  commissioner,  containing  in  detail  the  fol- 
lowing data  and  information: 

(a)  The  month  for  which  the  return  is  made. 

(b)  The  name  and  address  of  the  person,  partnership,  corporation, 

or  association  making  the  return. 

(c)  The  number  of  shares  of  stock  sold  and  purchased  on  such  ex- 

change and  cleared  by  its  clearing  agency  or  association. 

(d)  The  number  of  shares  of  stock  sold  and  purchased  on  such  ex- 

change that   Avere  not   cleared  by   its   clearing   agenc}'   or 
association. 

(e)  In  respect  of  shares  having  a  face  (or  par)  value: 

(1)  The  aggregate  face  value  of  all  shares,  not  including 

any  fraction  of  less  than  $100  of  face  value  involved 
in  any  transaction. 

(2)  The  number  of  fractions  of  less  than  $100  of  face  value 

involved  in  all  transactions. 

(f)  In  respect  of  shares  having  no  face  (or  par)  value: 

(1)  As  to  such  shares  of  an  actual  value  in  excess  of  $100 

per  share — 

(A)  The  aggregate  actual  value  of  all  shares,  not 

including  any  fraction  of  less  than  $100  in- 
volved in  any  transaction. 

(B)  The  number  of  fractions  of  less  than  $100  in- 

volved in  all  transactions  in  such  shares. 

(2)  As  to  such  shares  of  an  actual  value  of  $100  or  less  per 

share — 

(A)  The  total  number  of  such  shares. 

(g)  As  to  shares  purchased,  the  same  information  and  detail  re- 

quired for  shares  sold,  transferred,  and  delivered  required 
under  (e)  and  (f)  for  shares  sold,  transferred,  or  delivered. 

(h)   The  number  of  shares  of  stock  borrowed. 

(i)   The  number  of  shares  of  stock  loaned. 

(j)   The  number  of  shares  of  loaned  stock  returned. 

(k)   The  number  of  shares  of  borrowed  stock  returned. 

(1)  The  amount  of  tax  paid. 


16 

(m)  The  amount  in  dollars  of  stamps  purchased  during  the  month. 

(n)  The  amount  in  dollars  of  stamps  on  hand  on  the  last  day  of 
the  month  for  which  return  is  being  made. 

Such  returns  shall  be  made  upon  forms  furnished  upon  application 
by  the  internal  revenue  collector  or  other  designated  officer. 

The  Commissioner  of  Internal  Revenue  may,  from  time  to  time, 
require  any  person  wholly  or  partly  engaged  in  the  business  of 
buying,  selling,  or  transferring  shares  of  stock,  whether  at  public 
or  private  sale,  and  whether  or  not  such  sale  shall  be  made  on  an 
exchange  or  cleared,  settled,  or  adjusted  through  a  clearing  house 
to  render  under  oath  returns  of  all  such  transactions  upon  forms 
prescribed  by  him. 

RETURNS  BY  CLEARING  HOUSES. 

Art.  10.  Every  clearing  house  or  committee  or  body  through  or 
by  which  clearing  is  done  shall,  on  or  before  the  fifteenth  day  of  each 
month,  and  at  any  other  time  designated  by  the  Commissioner  of 
Internal  Revenue,  render  in  writing  under  oath  to  the  Commissioner 
of  Internal  Revenue  a  return  for  the  preceding  month,  or  for  any 
other  period  that  may  be  designated  by  the  commissioner,  of  all 
facts  in  their  possession  relating  to  any  and  all  such  transactions, 
and  showing  in  detail : 

(a)  The  month  for  which  return  is  made; 

(b)  The  name  and  address  of  the  clearing  house  or  similar  busi-' 

ness,  agency,  or  institution  making  the  return ;  and 

(c)  The  number  of  shares  of  stock  directed  to  be  received  and  the 

number  of  shares  of  stock   directed   to  be  delivered   and 

cleared,  settled,  or  adjusted  for  each  member  during  the 

month  or  period  for  which  the  return  is  made. 

Such  return  shall  be  made  upon  the  forms  to  be  furnished  upon 

application  by  the  collector  of  internal  revenue  or  other  designated 

officer. 

If  any  person  who  negotiates  sales  or  transfers  of  stock  on  a  stock 
exchange,  shall  appoint  in  writing  the  clearing  house  for  such  ex- 
change upon  which  such  sale  or  transfers  are  made,  if  any,  his 
agent  for  the  purposes  hereinafter  indicated,  such  clearing  house 
being  approved  hj  the  Commissioner  of  Internal  Revenue,  and  shall 
make  a  written  return,  statement  or  sheet,  to  such  clearing  house 
containing  a  full  disclosure  on  each  business  day  of  all  such  trans- 
actions, both  such  as  are  clearable  and  non-clearable,  of  the  preceding 
day  in  shares  of  stock  that  are  listed  or  permitted  to  be  dealt  in  by 
such  member  on  such  exchange,  also  which  if  any  of  such  stocks 
are  loaned  or  borrowed,  then  in  that  event  such  return,  statement, 
or  sheet  delivered  to  the  clearing  house  shall  be  deemed  to  be  the 


17 

bill,  or  memorandum  of  sale,  or  agreement  to  sell,  required  under 
section  807,  subdivision  4,  of  the  act  approved  October  3,  1917,  and 
such  clearing  house  is  hereby  authorized  to  affix  to  such  return, 
statement,  or  sheet  the  amount  of  stamps  required  for  each  sale  or 
agreement  to  sell  or  memorandum  of  sale  for  delivery  or  transfer 
of  such  stock  indicated  thereon,  and  to  cancel  the  stamp  so  affixed. 
The  affixing  and  cancellation  of  such  stamps  by  the  clearing  house 
shall  be  held  to  be  that  of  the  person  making  such  sale  or  agreement 
to  sell,  or  memorandum  of  sale,  for  delivery  or  transfer  of  such 
stock.  The  returns,  statements,  or  sheets  made  to  the  clearing  house 
shall  in  respect  of  each  sale  show  the  date  thereof,  the  name  of  the 
seller,  the  name  of  the  buyer,  the  amount  of  the  sale,  and  the  name 
of  the  stock,  certificates,  voting  shares,  or  other  things  traded  in, 
but  a  return  for  more  than  one  sale  may  be  upon  the  same  return, 
statement,  or  sheet,  and  no  settlement  of  differences  or  other  dealings 
between  members  shall  be  permitted  that  will  interfere  with  the  full 
disclosure  of  the  whole  transaction. 

Said  clearing  house  shall  preserve  the  returns,  statements,  or  sheets 
so  made  and  stamped  for  at  least  two  years. 

But  such  return,  statement,  or  sheet  to  the  clearing  house  shall  not 
relieve  the  person  from  making  the  monthly  return  required  by 
these  regulations. 

Wherever  any  clearing  house  association  or  similar  body  carries 
upon  its  sheets  or  records  information  or  reports  of  transactions 
showing  the  transfer  by  one  of  its  members  of  an  account  of  a  cus- 
tomer without  change  of  ownership  of  the  securities  of  the  customer, 
there  shall  be  kept  by  the  members  of  such  clearing  house  or  body 
concerned  in  such  transaction,  a  record  showing  the  particulars 
of  such  transaction. 

SUBSTITUTE  RETURNS— AGENTS. 

Art.  11.  If  any  person  or  clearing  house  required  to  make  any 
return  by  law,  or  the  regulations  thereunder,  shall  fail  or  refuse  to 
make  such  return  within  the  time  prescribed,  such  return  may  be 
made  by  an  internal  revenue  officer,  upon  inspection  of  the  books  and 
papers  of  the  person  or  clearing  house  required  to  make  such  re- 
turns ;  but  the  making  of  such  return  by  an  internal  revenue  officer 
shall  not  relieve  the  person  or  clearing  house  in  default  from  any 
penalty  incurred  by  reason  of  the  failure  to  make  such  return. 

Any  officer  designated  by  the  Commissioner  of  Internal  Revenue 
shall  have  authority  to  examine  the  books,  papers,  and  records  kept 
pursuant  to  these  regulations  and  may  require  the  production  of  any 
other  books,  records,  papers,  or  statements  of  account,  necessary  to 


18 

determine  any  liability  to  the  tax  imposed  by  the  act,  or  to  the  observ- 
ance of  the  provisions  of  the  regulations  made  in  accordance  there- 
with. 

SALE  OF  STAMPS. 

Art.  12.  No  person  other  than  a  collector  of  internal  revenue,  or 
duly  authorized  deputy  collector  of  internal  revenue,  an  Assistant 
Treasurer,  or  other  United  States  designated  depositary  shall  sell 
or  expose  for  sale,  give  away,  traffic  in,  trade,  barter,  lend,  bor- 
row, or  exchange  any  stamp,  issued  pursuant  to  these  regulations. 
No  person  shall  buy  or  receive  any  such  stamps  or  have  the  same 
in  his  possession  or  under  his  control,  unless  such  stamps  have  been 
purchased  directly  from  the  collector  of  internal  revenue.  Assistant 
Treasurer,  or  other  United  States  designated  depositary,  in  the  dis- 
trict in  which  the  stamps  are  to  be  used. 

All  requisitions  for  stamps  to  be  used  under  these  regulations, 
shall  be  made  in  Avriting,  in  ink,  on  a. form  prescribed  by  the  Com- 
missioner of  Internal  Eevenue,  to  the  collector  of  internal  revenue, 
or  to  an  Assistant  Treasurer,  or  other  designated  depositary,  in 
the  internal-revenue  district  in  which  the  stamps  are  to  be  used, 
giving  the  date  thereof,  the  number  and  denomination  of  stamps 
applied  for,  and  the  name  and  address  of  the  purchaser,  and  shall 
])e  signed  in  ink  by  the  person  receiving  the  stamps. 

The  collector  of  internal  revenue  to  whom  such  requests  are  made 
shall  keep  a  record  thereof,  and  shall  keep  the  requisitions  separate 
and  apart  from  all  other  requisitions  for  stamps,  and  preserve  them 
in  his  office  for  a  period  of  two  years.  Any  Assistant  Treasurer  or 
designated  depositary  of  the  United  States,  receiving  requisitions 
for  such  stamps  shall  keep  a  record  of  each  such  requisition  and  at 
the  end  of  each  month  shall  file  such  requisitions  with  his  monthly 
report  to  the  collector  of  internal  revenue  of  the  district  in  which 
said  Assistant  Treasurer  or  other  designated  depositary  is  located. 

The  stamps  to  be  used  under  these  regulations  shall  be  of  such 
kind  and  color  as  are  prescribed  by  the  Commissioner  of  Internal 
Revenue. 

NOTE. 

For  the  provisions  as  to  fines  and  penalties  applying  particularly 
to  violations  or  attempted  evasions  of  the  act  or  of  these  regulations, 
reference  is  made  to  sections  802,  803,  807,  subdivisions  4  and  5,  and 
1004  of  the  "Act  to  provide  revenue  to  defray  war  expenses  and 
for  other  purposes,"  approved  October  3,  1917.  The  provisions  of 
the  internal-revenue  laws  of  the  United  States,  so  far  as  applicable, 
including  sections  317;'),  3174  and  3175,  of  the  Eevised  Statutes,  as 
amended,  apply  to  said  act. 


PART  2. 

Regulations  Promulgated  by  the  Commissioner  of  Internal  Reve- 
nue, with  the  Approval  of  the  Secretary  of  the  Treasury,  for 
the  Collection  of  Stamp  Taxes  Upon  Sales  of  Products 
or  Merchandise  on  Exchanges  for  Future  Delivery. 


DEFINITIONS. 


Art.  1.  That  for  the  purposes  of  these  regiilations  the  term  "  sale  " 
or  "  contract  of  sale  "  shall  be  held  to  include  all  sales,  or  agreements 
of  sale,  or  agreements  to  sell,  including  so-called  transfers  or 
"scratched  sales." 

The  word  "  person  "  or  "  every  person,"  or  similar  term,  whenever 
used  in  these  regulations,  shall  include  the  plural  as  well  as  the 
singular,  and  shall  be  taken  to  refer  to  individuals,  partnerships, 
associations,  and  corporations,  except  where  it  is  plain  from  the  con- 
text that  a  different  meaning  is  intended. 

The  word  "  exchange  "  as  used  in  these  regulations,  except  as  other- 
wise specifically  indicated  in  the  regulations,  shall  be  deemed  and 
taken  to  include  each  and  every  agent  or  agency,  auction  place,  or 
other  meeting  place  at  which  produce  or  merchandise  for  future 
delivery  is  publicly  bought,  sold,  bid  for,  offered,  or  exchanged,  or 
contracts  for  such  future  delivery  are  made,  either  between  the 
members  or  patrons  of  such  exchange,  or  as  between  members  and 
nonmembers,  patrons,  and  the  public,  and  it  shall  include  all  incor- 
porated and  unincorporated  associations  of  individuals,  pjirtnei-ships, 
and  corporations  engaged  in  the  business  of  publicly  selling,  buying, 
or  exchanging  product^  or  merchandise  for  future  delivery. 

The  term  "  clearing  house  "  shall  be  held  to  mean  each  and  every 
clearing-house  corporation,  clearing-house  association,  or  incorpo- 
rated and  unincorporated  association,  carried  on  for  the  purpose  of 
clearing,  settling,  and  adjusting  transactions  in  purchasing,  selling, 
receiving,  or  delivering  products  or  merchandise,  whether  such  clear- 
ing house  be  a  part  or  department  of  an  exchange  or  an  independent 
body. 

The  act,  omission,  or  failure  of  am^  official,  agent,  or  other  person 
acting  or  employed  by  any  person,  association,  partnership,  or  cor- 
poration, within  the  scope  of  his  employment  or  office,  shall  in  every 
case  also  be  deemed  the  act,  omission,  or  failure  of  such  person,  asso- 
ciation, partnership,  or  corporation. 

(19) 


20 

REGISTRATION. 

Art.  2.  Every  person  engaged  in  whole  or  in  part  in  making  con- 
tracts of  sale  of  any  product  or  merchandise  or  commodity  at,  on,  or 
in,  or  under  the  rules  or  customs  of  any  exchange  for  future  delivery, 
or  engaged  in  the  businc?^s  of  accepting  or  procurmg  the  transmis- 
sion of  such  contracts  of  sale,  to  be  executed  on  any  exchange,  and 
every  exchange  and  every  clearing  house  shall,  on  the  first  day  of 
December,  1917,  and  if  not  on  that  date  engaged  in  business,  then 
within  ten  days  after  engaging  in  business,  and  on  the  first  day  of 
July  annually  thereafter  file  m  the  office  of  the  collector  of  internal 
revenue  of  the  district  in  which  each  place  of  business  of  such  person, 
exchange,  or  clearing  house  is  located,  or  with  such  other  internal- 
revenue  officer  as  may  be  hereafter  designated,  a  statement  under 
oath  setting  forth  the  full  name  of  such  person,  if  an  individual,  and 
if  a  partnership  the  full  names  of  all  the  members  of  such  partner- 
ship, with  the  post-office  address  of  the  individual  or  partnership; 
and  if  the  person  filing  such  statement  be  a  corporation  or  associa- 
tion it  shall  set  forth  its  principal  office  or  place  of  business  with 
the  names  and  addresses  of  its  chief  officer  and  its  secretary,  accom- 
panied by  a  list  of  its  members  and  their  addresses,  and  if  in- 
corporated when  and  where  incorporated,  and  if  unincorporated, 
under  what  agreement  or  authority  it  is  conducting  business,  tor 
gether  with  a  copy  of  such  agreement.  Statements  filed  in  behalf 
of  any  corporation,  association,  exchange,  or  clearing  house  shall 
be  executed  and  duly  acknowledged  by  the  president  or  secretary 
thereof.  EA-ery  statement  filed  by  an  exchange  or  clearing  house 
shall  specifically  set  forth  the  character  of  the  business  conducted  or 
intended  to  be  conducted.  Each  exchange  and  clearing  house  shall 
also  file  with  the  said  collector  or  other  designat.  cl  internal-revenue 
officer  a  copy  of  its  constitution,  charter,  agreement  of  association, 
by-laws,  and  regulations,  and  all  amendments  thereto,  as  the  same 
may  from  time  to  time  be  adopted,  and  the  names  and  addresses  of 
new  members  as  from  time  to  time  admitted  to  membership. 

The  statements  required  by  these  regulations  shall  be  made  upon 
forms  to  be  prescribed  by  the. Commissioner  of  Internal  Revenue. 

RECORDS  AND  CERTIFICATES. 

Art.  3.  Every  collector  of  internal  revenue  or  other  designated 
internal-revenue  officer  shall  file  and  preserve  each  statement  or  regis- 
tration made  to  him  in  accordance  with  these  regulations,  and  shall 
issue  to  the  person  making  such  statement  a  certificate  of  registry 


21 

showing  the  date  of  issue,  the  name  of  the  person,  the  nature  of  the 
business  for  which  the  certificate  is  granted,  and  the  date  of  the  ex- 
piration of  the  registration,  which  certificate  shall  be  signed  by  the 
collector  or  other  designated  internal-revenue  officer,  and  shall  at 
all  times  during  the  period  for  which  it  is  issued  be  posted  in  some 
prominent  place  in  the  office  of  the  person  receiving  it.  If  the  busi- 
ness of  such  person  is  conducted  at  more  than  one  place,  a  certificate 
shall  be  so  posted  in  each  such  place  of  business. 

TRANSACTIONS  NOT  TAXABLE. 

Art.  4.  No  tax  is  imposed  on  cash  sales  of  products  or  merchandise 
for  immediate  or  prompt  delivery  which  in  good  faith  are  actually 
intended  to  be  delivered.  All  sales  at  an  exchange  for  future  de- 
livery are  subject  to  the  payment  of  the  tax. 

For  the  purpose  of  these  regulations  "  immediate  or  prompt  de- 
livery "  shall  mean  delivery  at  once  or  as  soon  as  practicable,  and  in 
any  event  within  twenty  days  of  the  date  of  the  sale  or  agreement. 
Every  sale  or  agreement  not  evidenced  by  a  memorandum  or  contract 
expressly  requiring  immediate  or  prompt  delivery  within  the  above 
definition  shall  be  deemed  to  be  for  future  delivery.  In  all  cases  in 
which  the  commissioner  is  not  satisfied  from  the  evidence  submitted 
to  him  that  the  transaction  was  in  good  faith  intended  to  be  followed 
by  immediate  or  prompt  delivery,  within  the  above  definition,  the 
seller  shall  be  required  to  pay  the  tax  as  on  a  sale  for  future  delivery. 

Sellers  of  products,  merchandise,  or  commodities  having  paid  the 
tax  provided  by  law  may  transfer  such  contracts  to  a  clearing-house 
association,  and  such  transfer  shall  not  be  deemed  to  be  a  sale,  or 
agreement  of  sale,  or  agreement  to  sell,  within  the  provisions  of  the 
act,  provided  that  such  transfer  does  not  vest  any  beneficial  interest 
in  the  clearing-house  association  and  is  made  for  the  sole  purpose  of 
enabling  such  clearing-house  association  to  adjust  and  balance  the 
accounts  of  the  members  of  said  clearing-house  association  on  their 
several  contracts. 

No  provision,  by-law,  rule,  or  custom  of  any  exchange,  board  of 
trade,  or  similar  institution  or  place  of  business  which  is  inconsistent 
or  in  conflict  with  any  requirement  or  provision  of  the  "Act  to  pro- 
vide revenue  to  defray  war  expenses,  and  for  other  purposes,"  ap- 
proved October  3,  1917,  or  any  regidations  thereunder,  nor  any 
collateral,  or  additional  agreement  or  understanding,  either  verbal  or 
written,  respecting  the  subject  matter  of  such  contract  or  the  settle- 
ment or  fulfillment  thereof,  which  is  inconsistent  or  in  conflict  with 
any  requirement  of  said  act  or  the  regulations  thereunder  promul- 
gated by  the  Commissioner  of  Internal  Kevenue,  with  the  approval 
of  the  Secretary  of  the  Treasury,  shall  exempt  any  person  fi'oni  the 


22 

payment  of  the  tax  provided  for  under  section  807,  subdivision  5,  of 
said  act. 

MEMORANDA  OF  SALES. 

Art.  5.  Every  person  who  makes  sales  or  contracts  of  sale  of  any 
product,  merchandise,  or  commodity  at,  on,  or  in  any  exchange  for 
future  delivery,  shall,  except  as  herein  otherwise  expressly  pro- 
vided, deliver  to  the  buyer  a  bill,  memorandum,  agreement,  or  other 
evidence  of  such  sale  or  agreement  of  sale,  which  shall  show  the 
date  thereof,  the  name  of  the  seller,  the  name  of  the  purchaser,  the 
product,  merchandise,  or  commodity,  the  quantity  thereof  to  which 
it  refers,  the  price,  the  aggregate  amount  of  the  sale,  and  the  amount 
of  the  tax  to  be  paid,  to  wdiich  bill,  memorandum,  agreement,  or 
other  evidence  of  sale  there  shall  be  affixed  a  lawful  stamp  or  stamps 
in  value  equal  to  the  amount  of  tax  on  such  sale. 

No  single  sale  or  contract  of  sale  that  is  made  upon  an  exchange 
by  one  member  for  another  shall  require  to  be  evidenced  by  more 
than  one  such  stan>i3ed  memorandum. 

If  any  person  making  contracts  of  sale  for  future  delivery  of 
any  products  or  merchandise  at,  in,  or  on  any  exchange  shall  in 
writing  appoint  the  clearing  house  for  tho  exchange  upon  which 
such  sales  are  made  his  agent  for  the  purposes  hereinafter  indicated, 
such  clearing  house  being  approved  by  the  Commissioner  of  Internal 
Revenue,  and  shall  make  a  written  return  or  sheet  of  each  such  sale  to 
such  clearing  house  in  accordance  wdth  these  regulations,  the  return 
or  sheet  of  the  person  to  the  clearing  house  shall  be  deemed  to  be  the 
bill,  memorandum,  or  agreement  of  sale  required  to  be  delivered  by 
the  seller  to  the  buyer,  and  the  clearing  house  is  hereby  authorized  to 
affix  to  such  return  or  sheet  the  amount  of  stamps  required  for  each 
contract  of  sale  indicated  thereon,  and  to  cancel  the  stamps  so  affixed; 
the  affixing  and  cancellation  of  such  stamps  by  the  clearing  house  to 
be  held  to  be  that  of  the  person  making  suctj  contracts  of  sale.  The 
return  or  sheet  of  sales  so  made  to  the  clearmg  house  shall  in  respect 
of  each  sale  set  forth  the  date,  the  name  of  the  seller,  the  name  of  the 
purchaser,  the  amount  of  the  sale,  and  the  matter  or  things  to  which 
it  refers,  but  a  return  for  more  than  one  sale  may  be  made  upon  the 
same  paper  or  sheet.  The  clearing  house  shall  preserve  for  a  term  of 
not  Isss  than  two  years  each  return  or  sheet  made  to  it  by  any  person 
under  the  foregoing  regulations. 

Every  clearing  house  so  acting  shall  include  in  the  monthly  re- 
turn to  the  Coimnissioner  a  statement  of  the  amounts  of  stamps  so 
affixed  and  canceled  for  each  person.  The  making  of  such  return 
by  the  clearing  house  shall  not  relieve  the  person  maldng  such  sales 
from  making  the  monthly  return  of  his  transactions  required  by  these 
regulations. 


23 

The  person  using  or  affixing  stamps  shall  write  or  stamp  thereon 
in  ink  his  initials  and  the  day,  month,  and  year  on  which  the  same 
shall  be  used  or  affixed,  or  shall,  by  cutting  and  canceling  the  stamp 
with  a  machine  or  punch  affix  his  initials  and  date  as  aforesaid,  so 
deface  the  stamp  as  to  render  it  unfit  for  reuse.  In  addition  to  the 
foregoing,  stamps  of  the  value  of  10  cents  or  more  shall  have  three 
parallel  incisions  made  by  some  sharp  instrument  lengthwise  through 
the  stamp  after  the  same  has  been  attached  to  the  document :  Provided^ 
This  will  not  be  required  where  stamps  are  canceled  by  perforation. 
The  cancellation  by  either  method  should  not  so  deface  the  stamp  as 
to  prevent  its  denomination  and  genuineness  from  being  readily 
determined. 

RECORDS  BY  SELLERS  AND  BUYERS. 

Art.  6.  All  persons  who  make  sales  or  contracts  of  sales,  including 
so-called  "  transferred  or  scratch  sales,"  "  pass  outs,"  "  pair-off s,"  or 
'■•  matched  trades,  and  all  other  forms  of  sale  of  any  product  or 
merchandise  at,  on,  in,  or  under  the  rules,  or  customs  of  any  exchange 
for  future  delivery  shall  keep  a  record  showing : 

(a)  Date 'when  contract  was  made. 

(b)  Name  and  address  of  the  other  party  to  the  contract. 

(c)  Name  of  person  executing  the  contract. 

(d)  Whether  the  transaction  is  a  purchase  or  sale. 

(e)  Quantity  of  product,  merchandise,  or  commodity  involved; 

whether  in  tons,  pounds,  bales,  bushels,  bags,  mats,  barrels, 
gallons,  or  other  unit  of  measure  or  weight,  as  the  case 
may  be. 

(f)  Name  of  product,  merchandise,  or  commodity,  including  (if 

not  a  basis  grade  contract)  grade,  type,  sample,  or  de- 
scription. 

(g)  Name  of  customer. 

(h)  Whether  the  contract  is  a  "basis  grade  "  contract. 

(i)   Time  specified  in  contract  for  delivery. 

(j)   Specified  price  per  ton,  pound,  mat,  bale,  bag,  bushel,  barrel, 

gallon,  or   other  unit  of  measure  or  weight,  as  the  case 

may  be. 
(k)   Gross  amount  of  sale  or  purchase. 
(1)   Amount  of  tax  paid, 
(m)  Whether  the   order  for  sale  or  purchase   was  of  domestic 

(meaning  the  continental  United  States)  or  foreign  origin 

(meaning  from  countries  other  than  the  continental  United 
jStates). 
(n)  Date  of  delivery  or  settlement.' 
(o)  Method  of  fulfillment  or  settlement. 


24 

Persons  who  use  such  forms  may  incorporate  additional  columns 
which  would  be  of  use  to  them,  such  columns  to  be  placed  in  such 
positions  as  not  to  interfere  with  the  columns  and  headings  pre- 
scribed.   Such  record  forms  will  not  be  supplied  by  the  department. 

The  records  required  by  these  regulations  shall  be  legibly  written 
in  ink  and  kept  sej^arate  in  books,  and  contracts  of  sale  for  future 
delivery  of  two  or  more  distinct  products  or  merchandise  shall  be 
kept  separate.  Any  person  who  executes  or  makes  such  contracts  of 
sale  shall  preserve  the  trading  cards,  memoranda,  or  slips  of  each 
transaction,  and  the  purchaser  shall  preserve  the  bill,  memorandum, 
or  evidence  of  sale  to  which  the  stamps  are  affixed,  for  the  period  of 
two  years. 

The  form  of  the  record  required  by  these  regulations  shall  be  as 
follows : 


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26 

RECORDS  TO  BE  KEPT  BY  CLEARING  HOUSES. 

Art.  7.  All  persons  who  act  in  the  capacity  of  a  clearing  house  or 
clearing  association  shall  keep  a  record  showing : 

(a)  Name  of  person  for  whom  each  contract  is  cleared. 

(b)  Date  when  contract  was  made. 

(c)  Whether  the  transaction  is  a  purchase  or  sale. 

(d)  Quantity  of  j^roduct,  merchandise,  or  commodity  involved, 

whether  in  tons,  pounds,  bales,  bushels,  bags,  mats,  barrels, 
gallons,  or  other  unit  of  measure  or  weight,  as  the  case 
may  be. 

(e)  Name  of  product,  merchandise,  or  commodity,  including  (if 

not  a  basis-grade  contract)  grade,  type,  sample,  or  descrip- 
-    tion. 

(f )  Whether  the  contract  is  a  basis-grade  contract. 

(g)  Time  specified  in  contract  for  delivery, 
(h)  Date  of  settlement. 

(i)    Method  of  settlement. 

Records  of  sales  for  future  delivery  of  two  or  more  distinct  prod- 
ucts or  merchandise  must  be  kept  separate. 

RETURNS  BY  MEMBERS  OF  EXCHANGES. 

Art.  8.  All  persons  who  make  contracts  of  sale  of  any  commodity, 
product,  or  merchandise,  at,  on,  or  in  any  exchange,  board  of  trade, 
or  other  similar  place  of  business,  for  future  delivery,  whether  such 
contracts  shall  be  cleared  and  adjusted  through  a  clearing  house,  or 
clearing  association,  or  directly  between  the  seller  and  buyer,  or 
otherwise,  shall  on  or  before  the  fifteenth  day  of  each  month,  and 
at  any  other  time  required  by  the  Commissioner  of  Internal  Revenue, 
make  return,  in  writing,  to  the  Commissioner  of  Internal  Revenue, 
or  some  officer  designated  by  him,  for  the  preceding  month  or  any 
other  period,  verified  before  some  officer  authorized  to  administer 
oaths,  showing : 

(a)  The  number  of  contracts  of  sale  and  purchase  of  each  product, 

merchandise,  or  commodity  brought  forward  from  the  pre- 
ceding month. 

(b)  The  number  of  contracts  of  sale  and  purchase  of  each  product, 

merchandise,  or  commodity  during  the  Current  month. 

(c)  The  month  in  which  the  products,  merchandise,  or  commodity 

is  to  be  delivered. 

(d)  The  method  of  settlement  of  each  contract,  i.  e.  whether  by 

"  actual  delivery,"  "  notice,"  "  ring,"  "  direct,"  "  transfer," 
or  "  scratch  sale,"  "  pair  off,"  or  "  matched,"  "  pass  out," 
"  set-off,"  "  give  up,"  through  a  clearing  house  or  clearing 
association,  or  otherwise. 


27 

(e)  The  gross  amount  of  the  contracts  of  sale. 

(f )  The  tax  paid  thereon. 

(g)  The  number  of  contracts  both  of  purchase  and  sale  left  open 

at  the  end  of  the  month. 

(h)  The  amount  of  stamps  on  hand  from  preceding  month. 

(i)  The  amount  of  stamps  purchased  during  month. 

(j)  The  amount  of  stamps  used  during  month. 

(k)   Balance  of  stamps  on  hand  at  end  of  month. 

(1)  The  origin  of  the  order  of  the  contracts,  whether  domestic  or 
foreign. 

Such  returns  shall  be  made  upon  forms  to  be  furnished,  upon 
application,  by  the  collector  of  internal  revenue,  or  other  designated 
officer  of  the  district  in  which  the  exchange,  board  of  trade,  or  other 
similar  place  is  located. 

RETURNS  BY  CLEARING  HOUSES. 

Art.  9.  Every  clearing  house,  or  clearing  association,  shall  on  or 
before  the  15th  day  of  each  month,  and  at  any  other  time  required, 
render  in  writing,  under  oath,  a  return,  for  the  preceding  month 
or  for  any  other  period  designated,  to  the  Commissioner  of  Internal 
Revenue  of  all  facts  in  their  possession  showing: 

(a)  The  number  of  contracts  "  long"  and  "  short "  for  each  mem- 

ber brought  forward  from  the  preceding  month. 

(b)  The  number  of  contracts  bought  or  sold  by  each  member  of 

the  association. 

(c)  The  number  of  tons,  pounds,  bales,  bushels,  bags,  mats,  bar- 

rels, or  gallons,  or  other  units  of  weight  or  measure  in- 
volved in  such  constracts,  as  the  case  may  be. 

(d)  The  month  in  which  such  product,  merchandise,  or  commodity 

is  to  be  delivered. 

(e)  The  method  of  settlement  of  said  contracts — i.  e.,  whether  by 

"  set-off,"  "  notice,"  or  "  delivery,"  or  by  any  other  method. 

(f )  The  number  of  open  contracts  "  long  "  and  "  short "  for  each 

member  carried  to  the  following  month. 
Such  returns  shall  be  made  upon  forms  to  be  furnished,  upon  appli- 
cation, by  the  collector  of  internal  revenue  of  the  district,  or  other 
designated  officer,  in  which  the  clearing  house  or  clearing  associa- 
tion is  situated. 

FAILURE  TO  MAKE  RETURNS— AGENTS. 

Art,  10.  If  any  person,  or  clearing  house  or  clearing  association, 
required  to  make  returns  by  this  act,  or  the  regulations  thereunder, 
shall  fail,  or  refuse  to  make  any  return  within  the  time  prescribed  in 


28 

these  regulations,  or  designated  by  the  Commissioner  of  Internal 
Revenue,  then  the  same  shall  be  made  by  an  internal-revenue  officer, 
upon  inspection  of  the  books  and  papers  of  the  person,  or  clearing 
house,  or  clearing  association,  so  required;  but  the  making  of  said 
return  by  an  internal-revenue  officer  shall  not  relieve  the  person  in 
default,  from  any  penalty  incurred  by  reason  of  his  failure  to  make 
such  return. 

Any  officer  designated  by  the  Commissioner  of  Internal  Kcvenue 
shall  have  authority  to  examine  the  books,  papers,  and  records  kept 
pursuant  to  these  regulations,  and  may  require  the  production  of  any 
other  books,  records,  papers,  or  statements  of  account,  necessary  to 
determine  any  liability  to  the  tax  imposed  by  this  act,  or  the  observ- 
ance of  the  provisions  of  the  regulations  made  in  accordance  there- 
with. 

SALE  OF  STAMPS. 

Art.  11.  No  persons  other  than  a  collector  of  internal  revenue, 
or  duly  authorized  deputy  collector  of  internal  revenue,  assist- 
ant treasurer,  or  designated  depositary  of  the  United  States,  in 
the  district  in  which  is  located  an  exchange,  shall,  sell  or  expose 
for  sale,  traffic  in,  trade,  barter,  or  exchange  any  stamp  required 
by  law  or  by  these  regulations  to  be  used  for  the  payment  of  taxes 
upon  sales  or  contracts  of  sale  of  any  product  or  merchandise  for 
future  delivery. 

All  requisitions  for  such  stamps  shall  be  made  in  writing  on  a 
form  prescribed  by  the  Commissioner  of  Internal  Revenue  to  the 
collector  of  internal  revenue,  an  assistant  treasurer,  or  designated 
depositary  in  the  internal-revenue  district  in  which  the  stamps  are 
to  be  used,  giving  the  date  thereof,  the  number  and  denomination 
of  stamps  applied  for,  and  the  name  and  address  of  the  purchaser, 
and  shall  be  signed  in  ink  by  the  person  receiving  the  stamps.  If 
the  requisition  for  such  stamps  shall  be  made  to  any  assistant 
treasurer  or  designated  depositary  of  the  United  States,  such  as- 
sistant' treasurer  or  designated  depositary  shall  keep  a  record 
thereof,  and  at  the  end  of  each  month  shall  file  such  requisitions  with 
his  monthly  report  with  the  collector  of  internal  revenue  of  the  dis- 
trict in  which  said  assistant  treasurer  or  designated  depositary  is 
located.  The  collector  of  internal  revenue  shall  keep  the  requisitions 
for  such  stamps  made  to  him  and  those  filed  by  such  assistant 
treasurer  or  designated  depositary  separate  and  apart  from  all 
other  requisitions  for  stamps  and  preserve  them  in  his  office  for  a 
period  of  two  years. 

The  stamps  shall  be  of  a  color  and  design  prescribed  by  the  Com- 
missioner of  Internal  Revenue. 


29 

NOTE. 

FINES  AND  PENALTIES— ENFORCEMENT. 


For  the  provisions  as  to  fines  and  penalties  applying  particularly 
to  violations  or  attempted  evasions  of  the  act  or  of  these  regulations 
reference  is  made  to  sections  802,  803,  807,  subdivision  5,  and  1004 
of  the  "Act  to  provide  revenue  to  defray  war  expenses,  and  for 
other  purposes,"  approved  October  3,  1917.  The  provisions  of  the 
internal-revenue  laws  of  the  United  States,  so  far  as  applicable, 
including  sections  3173,  3174,  3175,  of  the  Kevised  Statutes,  as 
amended,  apply  to  said  act. 

November  30,  1917. 

Commissioner  of  Internal  Revenue.     | 
Approved : 


Secretary  of  the  Treasury. 


o 


LAW  LIBRARY 
LOS  ANCWfcBB 


GAYLAMOUNT    , 
PAMPHLET  BINDER   |: 

Manufactured  by      ^ 
GAYLORD  BROS.  Inc.  , 

Syracuse,  NY. 

Stockton,  Co'it  . 


UC  SOUTHERN  REGIONAL  LIBRARY  F^^^^^^ 


D    000  829  394    6 


